It can be rough finding out that you've gotten stuck with an underwater mortgage.
For more than 20 years, Americans have been making housing decisions based on the advice of experts who told us that investing in our own house was the way to the American Dream.
Now, here we are with a house that's not worth what the mortgage lender wants us to pay for it.
And at the same time given our country's current economy, many of us are out of a job or making way less money than we used to.
Having our supposed retirement investment go south on us, too, just adds insult to injury! But here's something that your mortgage lender doesn't want you to know-you do have options when you're faced with an underwater mortgage.
Far more options than you know! And you can survive this underwater mortgage and come out the other end of things with yourself, your family, and even most of your finances intact.
You just have to be willing to be a little ruthless and think of your house the way your mortgage lender thinks of it-as numbers on a piece of paper.
Yes, we know this is hard.
My wife, Kristin, has started specializing in helping clients with short sales.
She gets to hold the hands of crying clients when she has to tell them that their memories and their hopes and dreams for their house don't make it worth a penny more to a buyer.
We also know this is hard because we've been through it ourselves.
But if you can't think of your house and your mortgage as business ventures, your lender is going to have an emotional power over you, that's hard to shake.
OK? So once you can see yourself in a situation that's defined by numbers and logic, you've got some decisions to make.
Does it make sense to ride out your underwater mortgage for a while longer and see if property values pick up enough to make staying worth your while? Or are you going to choose foreclosure now and save yourself tens of thousands, or even hundreds of thousands, of dollars that you could use for other things? In our opinion, you shouldn't look to rising property values to get your mortgage above water.
We haven't seen the worst of the housing crisis yet.
One of the most popular mortgage products of the mid 2000's-adjustable rate mortgages, or ARMs-are going to be "resetting" to much higher monthly payments very soon.
That means there's going to be another wave of foreclosures.
And another wave of foreclosures is going to mean more underwater mortgages.
Many areas are dealing with a second decrease in property values, a "double-dip," even as we're writing this! So take a look at the entire amount you'll end up paying over the life of your mortgage if you decide to stick with it.
Then look at the actual value of your house, and don't count on that value appreciating at anywhere near the rate it did in the 1990s and early 2000s.
If you don't like that figure-if that figure shocks and dismays you-it's time to think of your other options.
Foreclose or short sale your home.
An underwater mortgage can suck the life out of your financial future.
Or you can start making plans to get out from under that mortgage and start your life over again.
After Kristin and I made our decision, we were happily surprised at how easy it was to carry out!
For more than 20 years, Americans have been making housing decisions based on the advice of experts who told us that investing in our own house was the way to the American Dream.
Now, here we are with a house that's not worth what the mortgage lender wants us to pay for it.
And at the same time given our country's current economy, many of us are out of a job or making way less money than we used to.
Having our supposed retirement investment go south on us, too, just adds insult to injury! But here's something that your mortgage lender doesn't want you to know-you do have options when you're faced with an underwater mortgage.
Far more options than you know! And you can survive this underwater mortgage and come out the other end of things with yourself, your family, and even most of your finances intact.
You just have to be willing to be a little ruthless and think of your house the way your mortgage lender thinks of it-as numbers on a piece of paper.
Yes, we know this is hard.
My wife, Kristin, has started specializing in helping clients with short sales.
She gets to hold the hands of crying clients when she has to tell them that their memories and their hopes and dreams for their house don't make it worth a penny more to a buyer.
We also know this is hard because we've been through it ourselves.
But if you can't think of your house and your mortgage as business ventures, your lender is going to have an emotional power over you, that's hard to shake.
OK? So once you can see yourself in a situation that's defined by numbers and logic, you've got some decisions to make.
Does it make sense to ride out your underwater mortgage for a while longer and see if property values pick up enough to make staying worth your while? Or are you going to choose foreclosure now and save yourself tens of thousands, or even hundreds of thousands, of dollars that you could use for other things? In our opinion, you shouldn't look to rising property values to get your mortgage above water.
We haven't seen the worst of the housing crisis yet.
One of the most popular mortgage products of the mid 2000's-adjustable rate mortgages, or ARMs-are going to be "resetting" to much higher monthly payments very soon.
That means there's going to be another wave of foreclosures.
And another wave of foreclosures is going to mean more underwater mortgages.
Many areas are dealing with a second decrease in property values, a "double-dip," even as we're writing this! So take a look at the entire amount you'll end up paying over the life of your mortgage if you decide to stick with it.
Then look at the actual value of your house, and don't count on that value appreciating at anywhere near the rate it did in the 1990s and early 2000s.
If you don't like that figure-if that figure shocks and dismays you-it's time to think of your other options.
Foreclose or short sale your home.
An underwater mortgage can suck the life out of your financial future.
Or you can start making plans to get out from under that mortgage and start your life over again.
After Kristin and I made our decision, we were happily surprised at how easy it was to carry out!
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